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Obamacare Is the Right’s Worst Nightmare – Paul Krugman

News from New York: it looks as if insurance premiums on the individual market are going to plunge thanks to Obamacare. This shouldn’t come as a surprise; in fact, the New York experience perfectly illustrates why Obamacare had to look the way it does. And it also illustrates why conservatives should be terrified about this legislation, as it takes effect. Americans may have had a lot of misgivings in advance, thanks to vast, deliberately spread misinformation. But I agree with Matt Yglesias — unless the GOP finds even more ways to sabotage the plan, this thing is going to work, it’s going to be extremely popular, and it’s going to wreak havoc with conservative ideology.

To understand what’s happening in New York, you have to start with what almost everyone at least pretends to believe: Americans shouldn’t find it impossible to get health insurance because of pre-existing conditions that aren’t their fault. Two decades ago, New York tried to deal with this by imposing community rating: insurance is available to everyone, and the price doesn’t depend on your medical history.

The problem was that this created a death spiral: young, healthy people didn’t buy insurance, worsening the risk pool, driving up premiums, driving out more relatively healthy people, etc., until you were left with a rump of very ill people paying very high rates.

How do you deal with this? Well, ideally, Medicare for all. But since that wasn’t going to happen, you improve the risk pool by requiring everyone to buy insurance — the individual mandate. And since some people won’t be able to afford that, you also offer subsidies. Voila! ObamaRomneycare!